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Moody's Changes Saudi PIF's Outlook to Positive

The Flag of Saudi Arabia is displayed on the Kingdom Center as Saudi celebrates Flag Day, in Riyadh, Saudi Arabia, March 11, 2023. (Reuters)
The Flag of Saudi Arabia is displayed on the Kingdom Center as Saudi celebrates Flag Day, in Riyadh, Saudi Arabia, March 11, 2023. (Reuters)
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Moody's Changes Saudi PIF's Outlook to Positive

The Flag of Saudi Arabia is displayed on the Kingdom Center as Saudi celebrates Flag Day, in Riyadh, Saudi Arabia, March 11, 2023. (Reuters)
The Flag of Saudi Arabia is displayed on the Kingdom Center as Saudi celebrates Flag Day, in Riyadh, Saudi Arabia, March 11, 2023. (Reuters)

Moody's has changed its outlook on Saudi Arabia’s Public Investment Fund (PIF) from "stable" to "positive" and affirmed its long-term issuer and senior unsecured ratings at A1.

According to the performance evaluation, the rating reflects PIF's standalone creditworthiness as expressed by a BCA of A1.

Moody's took several factors into account when issuing the Fund's rating, namely the size of the asset under management supported by the sustainable growth of the Fund's investment returns, the high quality of the Fund's investment portfolio, sector diversification with investments across several different sectors both locally and internationally.

Also, among the agency's rating criteria is the firm's financial profile with very low leverage, very high-interest coverage, and an excellent liquidity profile.

In October 2022, PIF issued the first green bonds, including the first 100-year maturity, alongside two other tranches.

Last February, the Fund was set to raise $5.5 billion through its second sale of green bonds in four months, for which orders topped $32.5 billion.

PIF aims to be the most significant global sovereign Fund in a few years.

However, its primary goal is to help in developing the national economy, diversify income sources, and localize modern knowledge and innovative technologies.

It established economic partnerships that contribute to deepening the role of Saudi Arabia on the regional and global scene.

PIF is interested in supporting the role of the private sector and recently announced three initiatives as part of its efforts to enable further and empower private sector businesses.

The first is the Local Content Growth Program (MUSAHAMA), which aims to increase the share of local content spending in PIF's domestic portfolio to 60 percent by the end of 2025.

The second is the Suppliers Development Program, which will support the development and upskilling of local suppliers and vendors to meet the growing requirements of PIF's portfolio companies.

The Private Sector Hub is a dedicated channel that shares supplier and investment opportunities with the private sector. The hub is live, boasts more than 100 opportunities, and will be continuously enhanced and updated.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.